NAB takes the fight to buy now, pay later with zero interest credit card
NAB is taking the fight to buy now, pay later operators with the launch of a credit card targeting younger shoppers.
In a bid to claw back some of the market share ceded to the booming “buy now, pay later” sector, National Australia Bank has launched a no interest credit card it hopes will prove popular with debt-conscious younger shoppers.
The NAB StraightUp card gives customers access to up to $3000 in credit, with no interest, no annual fees, no late payment fees and no foreign currency fees. But there is a flat monthly charge, which varies depending on the card limit, ranging from $10 for a $1000 limit to $20 for a $3000 limit.
Customers do not pay the monthly fee if the card is not used and there are no other fees or charges.
The decision to launch Australia’s first no interest credit card was driven by customers wanting more control over their finances, NAB group executive for personal banking Rachel Slade said.
“They want something that puts them more in control. It’s really simple, easy to understand, gives them certainty about their repayments and confidence in their ability to repay,” Ms Slade told The Australian.
“What we’re seeing, particularly with young people, is almost a shift to that space in between debit and credit. So it’s a low credit limit, it’s support with managing budgeting. Customers using buy now, pay later (services) might use this instead.”
“Buy now, pay later” platforms such as Afterpay and Zip have up-ended traditional credit access in recent years, capturing large swathes of the market that have shown little interest in committing to high-interest credit cards.
The COVID-19 pandemic has hastened the uptake of their services as more consumers shopping online choose to pay for their goods over a series of instalments.
Homegrown operator Afterpay, the industry leader, has been the best performing stock on the ASX this year, with its share price rocketing from a low of $8.90 in March to a high of more than $90 last month. It is currently trading at $74, ending Wednesday’s session down 1.3 per cent.
Payment platform giant PayPal, meanwhile, just days ago launched its Pay-in-4 credit platform in the US, as it looks to grab a chunk of the lucrative market.
Both Afterpay and PayPal allow customers to pay for goods over four interest-free instalments instead of paying upfront. Late fees are charged if payments aren’t made on time.
While NAB’s new credit card doesn’t charge late fees, it requires higher minimum repayments than traditional credit cards, which Ms Slade said would help customers take greater control of their debt.